Emboldened by the polls and a feckless government, nothing stands between Bill Shorten and pillaging a pot of retirees’ money. He’s on a winner, he thinks, with no political opposition worth spit. If he’s right, the future for Australia is bleak. We have to go back to 2013 to set the scene.
You will recall the platform that took Tony Abbott to victory in 2013. Stop the boats was, I think. the most persuasive part. But up there too was ‘axe the taxes’ (on carbon and mining companies). Axing taxes we soon learnt to read narrowly, as Abbott, with the inept assistance of Joe Hockey, proceeded to try to impose a range of new imposts, including on poor people visiting the doctor and on old-age pensioners. None of this had been signalled ahead of the election.
Abbott at the time was my local member. I wrote to him telling him as a supporter that these new “taxes” would bury him if he didn’t back off. Bury him they did. Since then the tax grab has gathered pace under Malcolm Turnbull and Scott Morrison. Before I go on I would like to remind you, to save confusion, that we don’t as yet have a Labor government. Reportedly, disconcertingly, we still have ‘low-taxing’ Liberals in charge.
To my mind two new taxes stand out. The first is the bank tax levied on the liabilities of the four majors and Macquarie. It is a discriminatory tax on the shareholders, customers and employees of the aforementioned banks with no rationale other than to raise revenue. That is not its biggest problem. Its biggest problem is that it opens a door. And you ain’t seen nothing yet. Expect any incoming Labor government to charge through with a vengeance. Big miners and big banks and big profits generally will be targeted. And on what principle precisely can the Liberals in opposition then object?
The second tax is the unconscionable halving of the pension taper rate which means that hundreds of thousands of retirees have had their part-pension reduced or eliminated entirely. Bear in mind that we are talking about people of modest wealth who had carefully arranged their affairs to avoid taking the full pension. Foolish people. Now many have been put in position of being better off by reducing their assets in whatever way they choose and going onto a full pension.
Why do I use the word unconscionable? Simple, unannounced and impoverishing changes to the financial position of part-pensioners, who have little or no scope to change course, is not a decent thing to do. With a touch less sympathy, I would also say that that removing the tax-free status of superannuants with more than $1.6 million in assets is unconscionable. It would be different if it were part of a general policy, announced in advance of an election, to increase the progressivity of taxes across the board. As it is, it is a tax grab from a few oldies who have no voting power to hit back. And, again, it opens a door.
This particular door is now already being kicked in by Shorten. The removal of the cash rebating of franking credits (tax paid by the company per dollar of dividend) will largely hit superannuants.
If you listen to the debate you get commentators who are onside with the decision saying that most other countries don’t have dividend imputation (franking) while adding that some very rich folk benefit enormously from the current arrangements. Both are true. Both are out of context and deflect, disingenuously or stupidly, from the harm that will be done to many vulnerable people.
Unlike Australia, many countries without imputation have lower corporate tax rates and, vitally, have universal old-age pensions. Older people in Australia of modest means, including me by the way, so I declare a vested interest, structure their affairs carefully in light of the current arrangements to ensure they can pay their bills. They will all be seriously affected and disadvantaged by the Shorten changes, with no good options available to them.
Let me give an example. Jill, 72, lives alone in a small flat which, thankfully, she owns. She is in a bind. She has $600,000 in superannuation, which excludes her from receiving any pension. She can get around 2.5 % interest but that leaves her with just $15,000 per year to live on. This is substantially less than the single old-age pension of $21,000.
She’s forced into shares. She keeps $100,000 in interest bearing assets and buys $500,000 worth of fully-franked shares on which she earns an average of around 4.5% in dividends, plus franking credits of another 1.9%. Her total annual income now comes to $34,500.
She has medical bills but lives prudently. She is able to take an occasional short holiday with a couple of friends from her bowling club. She is content with her lot. That is her position pre-Shorten.
Post-Shorten her annual income declines by $9.500 to $25,000. Her income declines by a whopping 28%. No more holidays for you, Jill, Shorten intones from the comforts of Kirribilli House shortly after his electoral walloping of Turnbull. Jill is distraught with nowhere to turn and no one to turn to. Its winter’, she shuts off her gas heater and dons another jumper.
Too dramatic? I don’t think so. My example is not a stretch. There are many more people in Jill’s position or close to it than there are multimillionaires. If Shorten gets away with this cruel and unusual pillaging it will be yet another sign of a coming socialist republic. Is that a stretch?
Tell me, what kind of government is it that would turn on a group of its elderly citizens – relying on their own modest nest eggs to survive — in such a calculating, predatory, and vindictive way. (Adjectives fail me.) And who have we got to push back politically. Only those whose record on capricious, unfair taxation set the agenda in the first place.